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HT to Mark Perry, whose Chart of the Day inspired this post. Prof. Perry shows the rather astonishing decline over 8+ decades in the share of consumption expenditures devoted to food. I thought it would be interesting to contrast that to the rising share of family budgets devoted to health care during the same period.

My chart below tells the story. As a rough approximation there has been nearly a one-to-one swapping of food spending for health care spending. During the Depression and some post-war years, American families devoted nearly one-quarter of all their consumption spending to food (a broad category that includes food at home, food purchased away from home and alcohol). But starting in 1948, that share plummeted by more than two-thirds to its current level of 7.7 percent (although as Prof. Perry points out, it has been at that low level for roughly a decade).

In contrast health spending was quite stable at less than 5 percent of household spending for nearly two decades starting in 1929. Then, as food spending was steadily declining, health spending was on an upward streak whose pace was nearly identical to the downward trend in food expenditures. Every dollar being saved on food spending essentially was being funneled into health care.

Of course, no one should get the impression that Americans were starving themselves to afford medical care. In reality, we experienced a dramatic rise in our standard of living during these decades. Real GDP per capita, for example, has more than tripled just since 1950. To be sure, real GDP per capita is a lousy measure of living standards, but one analysis has shown using a superior metric, living standards rose twice as fast between 1972-1991 as real GDP per capita would have had us believe. Of equal importance, both this study and a much more recent one by my AEI colleagues Kevin Hassett and Aparna Mathur have shown that this rise in living standards also has benefited families in the lowest income levels. And even a casual inspection of obesity statistics suggests that if America has a problem, it is one of too much food, not too little.

As I noted in a related post I put up 18 months ago (coincidentally also inspired by Mark Perry!):

we as a nation have been able to afford more health care precisely because the time cost of other goods and services has declined. For the same number of hours worked, workers can enjoy the same standard of living even as they allocate more of their working time to purchasing health care. There is nothing wrong with this. The only issue is whether we are getting good value for the money when we buy health care. With only 11 cents of every health dollar paid directly out-of-pocket, I think most of us can honestly say “no.”

Obamacare promised to literally reverse the trend of ever-rising health costs, saving the average family of four $2,500 a year. That absurd (arguably mendacious) claim has been beaten to death, with even PolitiFact.com tossing it onto the Broken Promises pile. Admittedly, there has been a slowdown in health spending, but this is a slowdown that began in the mid-2000's, well before Barack Obama even took office. Probably the best single piece of evidence that Obamacare doesn't deserve much, if any credit for the health spending slowdown comes from a recent comparison of health spending trends across a number of high income countries.

The conclusion?

“In the 1980s, US excess growth far exceeded the OECD median excess growth. Over the past 20 years, however, the US and OECD median rates of excess growth have tracked each other quite closely. Furthermore, in recent years, rates of excess health care spending in the United States and OECD have declined below their historical norms; in 2010 and 2011 (and 2012 for countries with available data), excess spending was either negligible or negative. The slowdown in health care spending growth has been a global phenomenon; in fact, US excess growth in 2010 and 2011 was slightly higher than average relative to other industrialized countries.”

I realize President Obama promised us the sun and the moon to pass Obamacare. But it doesn't pass the sniff test that his health law magically triggered a global slowdown in health spending. More importantly, note above that our health spending performance was actually worse than other countries during the first two years of Obamacare; there's no good reason to suppose that this story dramatically reversed itself in 2012 and 2013 (and certain not in 2014 with the surge in Medicaid and Exchange subsidy spending).

If the law truly were working wonders on the health spending front, one would have expected the Medicare actuaries to notice: they, after all, are the people paid by taxpayers to be the experts on such matters. Instead, ever since the law's inception, they have dutifully rolled out reports year and after year (2010, 2011, 2012, 2013) demonstrating that Obamacare will increase spending over the next 10 years relative to what would have happened otherwise. And for those who are thinking "Well, sure, of course Obamacare will increase health spending in the short run, but in the long run, it will bend the cost curve and more than pay for itself" the Medicare actuaries have likewise been giving you bad news for years. They have raised profound doubts about whether the draconian cuts in Medicare spending are plausible without devastating adverse consequences on access to health care for seniors and others. They have carefully documented that if Congress sidesteps these restrictions--as they have done without fail for over a decade in protecting doctors from statutorily-"required" cuts in physician payments--health spending will be dramatically higher than the rosy scenario painted by the administration (2010, 2011, 2012, 2013).

In short, until and unless Obamacare is repealed and replaced with something more sensible, we can expect the health line in my chart to continue to grow upward and to the right for as far as the eye can see. Would that we had a president as fiercely devoted to fixing his badly broken health law as he is to defending his legacy for the history books.

INVESTORS’ NOTE: The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna (NYSE:AET), Humana (NYSE:HUM), Cigna (NYSE:CI), Molina (NYSE:MOH), WellPoint (NYSE:WLP), and Centene (NYSE:CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.